OhMyNews | 14 June 207

Japan OKs FTAs with Thailand, Chile

Revised Japan-Singapore FTA also approved by parliament

Hisane Masaki

With only 10 days left before its current session’s planned close on June 23, Japan’s parliament has ratified free-trade agreements with Thailand and Chile, paving the way for the FTAs to take effect as early as this autumn.

The House of Councilors, or the upper house of parliament, approved the FTAs with Thailand and Chile at a plenary session on Wednesday, nearly a month after the House of Representatives, or the lower house, passed the trade pacts in mid-May.

Japan’s FTAs with Thailand and Chile, which were both inked between late March and early April, will both eliminate tariffs on more than 90 percent of bilateral trade in terms of value within 10 years.

In 2006, Japan’s exports to Thailand grew 7.5 percent from the previous year to 2.66 trillion yen ($22.2 billion), while Japan’s imports from Thailand rose 14.3 percent to 1.96 trillion yen ($16.3 billion), according to Japanese Finance Ministry data. Meanwhile, Japan’s exports to Chile grew 21.6 percent in 2006 from the previous year to 126.4 billion yen ($1.1 billion), while Japan’s imports from Chile jumped 49.2 percent to 843.6 billion yen ($7.0 billion).

At its Wednesday plenary session, the House of Councilors also approved revisions to the 2002 FTA with Singapore. Under the revised Japan-Singapore FTA, which was already approved by the House of Representatives in mid-May, Japan will eliminate import tariffs on some Singaporean petroleum products, while Singapore will ease restrictions on Japanese banks’ entry into the Singaporean market.

Japan has so far signed FTAs with six countries — Singapore, Mexico, Malaysia, the Philippines, Chile and Thailand. Japan’s FTAs with Singapore, Mexico and Malaysia have already taken effect. Japan has also reached basic agreement in FTA negotiations with Indonesia and Brunei.

Japan is also negotiating FTAs with the 10-member Association of Southeast Asian Nations (ASEAN) as a whole, the oil-rich Gulf Cooperation Council (GCC), Vietnam, South Korea, India, Australia and Switzerland.

Meanwhile, the Japanese government is expected to adopt later this month key economic policy guidelines for 2007 calling for, among other things, considering FTAs with the United States and the 27-nation European Union.

Hiroko Ota, the minister for economic and fiscal policy, on Tuesday presented to a meeting of the Council on Economic and Fiscal Policy, the government’s key policymaking panel chaired by Prime Minister Shinzo Abe, a draft of the "basic policies for economic and fiscal management and structural reform for 2007."

The draft stipulates that the Japanese government will "consider as future tasks" FTAs with the U.S. and the EU. The draft is to be formally approved at a cabinet meeting on June 19. This wording on the FTA issue is apparently the result of a compromise between Japanese businesses and the ruling coalition.

Four private-sector members of the 11-member panel demanded that the key economic policy guidelines for 2007 stipulate the need to launch as soon as possible joint studies with the U.S. and the EU on concluding FTAs. Such studies are usually conducted before formal negotiations are launched. But Abe’s ruling Liberal Democratic Party (LDP) objected, for fear of losing farmers’ votes in a crucial election for the House of Councilors in July.

The four private-sector members of the panel include Fujio Mitarai, chairman of the Japan Business Federation (Nippon Keidanren), the nation’s biggest business lobby. Mitarai is also Chairman of Canon Inc.

Japanese and U.S. business groups have urged their governments to launch FTA negotiations as soon as possible. But both Tokyo and Washington remain reluctant to open FTA negotiations, at least at an early date. For Japan, the liberalization of agricultural trade, especially in rice, the most politically sensitive item, is considered the biggest stumbling block to launching FTA negotiations with major farm exporters, including the U.S.

After South Korea reached an FTA with the U.S. in early April and then opened FTA negotiations with the EU in early May, pressure has further grown from Japanese businesses for the Abe government to move toward FTA negotiations with the U.S. and the EU. Japanese exporters, especially of electronics goods, fear losing sales in the U.S. and European markets to their South Korean rivals, who will enjoy significantly lower or zero import tariffs in the two huge markets.
Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy.